Paddy Power and Betfair owner Flutter Entertainment PLC (LON:FLTR) will be among the headlines though the figures themselves may be slightly overshadowed by the ongoing probe by UK competition regulators over the company’s planned merger with Canadian poker giant The Stars Group (NASDAQ:TSGI).
The Competition & Markets Authority said in early February that it would be investigating whether the merger will result in “a substantial lessening of competition” in the UK, with a decision expected to be made by 31 March, even though Australian regulators have approved the combination.
For the year just gone, UBS are forecasting revenues of £2.1bn and group earnings (EBITDA) of £420mln versus guidance of between £420-440mln.
BAT’s short-term view cleared out
However, the future may bring new entries and further regulations that could disrupt long-standing players such as BAT. Washington is tightening laws around vaping to make it less appealing to kids, while there is widespread concern over the safety of such products for adult consumers as well.
Moreover, the minimum age to buy nicotine products in the US has been raised to 21 from 18, with expected reduction in cigarette volumes as well as menthol products. While the combustible business remains the largest, “the next generation product portfolio remains key to sentiment,” analysts at UBS said.
For now, investors can rest assured the FTSE 100-listed group has met targets, as stated in a December update.
The focus will be on profits, current trading and the outlook, including an update to the capital return programme, with a huge cash balance of £844mln at the end of December.
UBS sees potential upside for returns and expects Persimmon’s completion volumes and ASPs to grow in 2020 but profit margins to compress slightly.
WPP getting whipped into shape
Another giant where a new boss is slightly further down the restructuring road, is WPP PLC (LON:WPP), which also on Thursday will announce the first results under chief executive Mark Reid’s new strategy.
Coming up to two years since longtime boss Martin Sorrell stepped down, the advertising group’s efforts to slim down the behemoth last year included selling its 60% stake in market research group Kantar for £3.2bn.
All eyes on Thursday will be on whether the group has managed to sustain positive growth in the final three months of the year, having returned to growth in the second and third quarters.
A key area of interest will be the company’s North American businesses, where some trends were improving despite shrinking revenue, and global integrated agencies, which are key revenue drivers but also very exposed to digital disruption.
Cost savings from merging some of its businesses together could also provide some positivity for the bottom line.
UBS has forecast group net revenue growth of 0.5% to €12.9bn, although earnings per share are expected to drop 12% to 95.7p against consensus estimates of 97.7p as a result of higher tax rates and finance charges.
Aston Martin on a Stroll
The key order book for the brand’s first SUV, the DBX, stood at 1,800 units, and the board said underlying profit (EBITDA) for the year was expected to be £130-140mln – around half the previous year. Debt was expected to head towards £900mln.
Then the big news came at the end of the month when Canadian billionaire and F1 backer Lawrence Stroll led a consortium of financial heavyweights in a bail-out of the carmaker, providing a £55.5mln short-term loan and proposing an immediate injection of a £182mln equity investment and a £318mln rights issue after the results to pare debt and provide additional liquidity to fund the DBX ramp-up.
For 2019, analysts at Peel Hunt said they expect break even at the operating profit level on sales of £963m. “For FY20, our model has 2,000 DBX vehicles, but the additional depreciation and amortisation costs are expected to result in another pre-tax loss.”
Significant announcements on Thursday February 27:
Finals: British American Tobacco PLC (LON:BATS), Evraz PLC (LON:EVR), Flutter Entertainment PLC (LON:FLTR), Hikma Pharmaceuticals PLC (LON:HIK), Mondi PLC (LON:MNDI), Persimmon PLC (LON:PSN), Reckitt Benckiser Group PLC (LON:RB.), Standard Chartered PLC (LON:STAN), Rentokil Initial PLC (LON:RTO), RSA Insurance Group PLC (LON:RSA), St James’s Place PLC (LON:STJ), WPP PLC (LON:WPP), Aston Martin Lagonda Global Holding PLC (LON:AML), Bakkavor Group PLC (LON:BAKK), Inchcape PLC (LON:INCH), Drax Group PLC (LON:DRX), James Fisher & Sons PLC (LON:FSJ), F.B.D. Holdings PLC (LON:FBH), Grafton Group PLC (LON:GFTU), Greencoat UK Wind PLC (LON:UKW), Hastings Group Holdings PLC (LON:HSTG), Howden Joinery Group PLC (LON:HWDN), Hunting PLC (LON:HTG), Macfarlane Group PLC (LON:MACF), National Express Group PLC (LON:NEX), PPHE Hotel Group Ltd (LON:PPH), Provident Financial PLC (LON:PFG), Playtech PLC (LON:PTEC), Vesuvius Plc (LON:VSVS), Vistry Group PLC (LON:VTY)
Economic data: US GDP, US durable goods orders, UK house prices